Walmart Shares Still Positive for the Year as Investors Become Optimistic About Plans
February 9, 2018 by Douglas A. McIntyreEven though it remains in a death battle with powerful Amazon.com Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT) is one of the few Dow Jones Industrial Average stocks that is up this year despite the market carnage. Walmart has laid out plans to increase foot traffic to it stores, improve margins on merchandise and beat Amazon at its own e-commerce game.
Walmart shares are higher by 1.4% this year to $100. The Dow is down 3.5% to 23,860. Only four Dow stocks are in the green.
Among Walmart’s recent moves is one to increase margins on many of the items it sells at stores, and more particularly online. It has started to press suppliers for items it can sell over $10. Walmart offers free shipping, and expensive items help margins after the cost of free shipping. In other words, Walmart has made a move to increase margins at its online business.
The fact that Walmart has a large online business at all impresses many investors. It has combined the reach of Walmart.com with the buyout of Jet.com and several smaller websites. The aggregate sales of these are not nearly as large as Amazon’s, but Walmart has become the only real competition Amazon has. Other retailers do not have the customer base, brand power and balance sheet to go after Jeff Bezos.
In a period when brick-and-mortar retailers are suffering sales erosion, Walmart posted same-store sales 2.7% higher in the most recent quarter. An ever larger number of people order Walmart items online and pick them up at stores. It is a model Amazon cannot match. Grocery sales at Walmart are booming, according to the company. Amazon recently began a tiny program to challenge that. People can order food for delivery from its Whole Foods stores, if they are members of the Prime service. The trial has opened in a few medium-sized cities.
Walmart has made some modest inroads into Amazon’s business and posted modest increases in sales at its stores. Wall Street’s vote of confidence in the stock indicates Walmart will have a good year, even if the stock market falls apart.
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